Bangladesh Bank (BB) has capped agricultural loan interest rates at 7 per cent under a Tk10,000 crore refinancing scheme, while introducing a penalty for banks that overcharge borrowers or misuse the funds.
If a bank charges more than the permitted 7 per cent, or if the central bank finds that the refinancing has not been properly used, an additional 2 per cent will be charged on the relevant amount and recovered in a lump sum.
The central bank has also raised the overall agricultural and rural credit disbursement target by nearly 54 per cent to Tk60,000 crore for the 2026-27 financial year.
BB revised the scheme’s provisions on Sunday, replacing several clauses of its June 8 circular. The changes took effect immediately.
Under the refinancing scheme, participating banks will receive funds from BB at 3 per cent, while the rate charged to farmers or other eligible borrowers cannot exceed 7 per cent. The central bank has also made the rate uniform for all borrowers under the scheme.
The Tk60,000 crore agricultural and rural credit target for the current fiscal year is 53.85 per cent higher than the Tk39,000 crore target set for FY2025-26. Banks have also been instructed to raise agriculture’s share of their total lending to 4 per cent from 2.5 per cent.
Of the overall target, state-owned commercial and specialised banks will disburse Tk20,500 crore, while private and foreign commercial banks will provide Tk39,500 crore.
Participating banks must repay the refinancing, including BB’s 3 per cent interest or profit, within 18 months of receiving the funds.
Banks have also been instructed to publicly promote the scheme by displaying banners inside and outside branches showing that financing is available to farmers at the 7 per cent rate.
The broader agricultural and rural credit policy gives greater emphasis to financing genuine farmers, fisheries, livestock and other rural activities. Government agricultural extension, fisheries and livestock officials may assist banks in identifying eligible borrowers.
BB has also eased access to agricultural finance by allowing collateral-free loans of up to Tk500,000 for fisheries and livestock activities and encouraging banks to consider alternative security, including personal, social and group guarantees, particularly for women and marginal farmers.
The central bank has said the expanded agricultural lending programme is intended to boost farm production, employment and incomes in rural areas while supporting food security and broader economic activity.
